Red Dog lead, zinc mine marks 25 years, $1B in royalties

The Red Dog Mine in Northwest Alaska turned 25 years old July 17 after producing since 1989 and paying about $1 billion in royalties to NANA Regional Corp., the landowner.

NANA paid $608 million of that to other Alaska Native corporations under revenue-sharing provisions of the Alaska Native Claims Settlement Act and $199 million in dividends to its own shareholders.

The remaining $103 million was retained by NANA to help pay operations and for investments in other business, which has now helped NANA grow a diversified portfolio of assets that earned the corporation $1.7 billion in revenues last year.

To celebrate the July 17 anniversary, NANA invited guests to the mine including including former Gov. Bill Sheffield and Willie Hensley, NANA leaders and former legislators who played key roles in the original mine development.

Teck president and CEO Don Lindsay also attended.

The mine is operated by Teck Alaska Inc. Teck Alaska’s parent, Canada-based Teck Resources, purchased Cominco, the Canadian company that developed Red Dog with NANA in the mid-1980s.

Red Dog is a surface mine that is one of the world’s largest zinc mines, producing 551,300 tonnes of zinc concentrates in 2013 (a tonne is approximately 2,200 pounds). The mine earned $874 million in total revenues that year, according to Teck,

Production for 2014 is estimated at 500,000 tonnes to 525,000 tonnes along with 95,000 tonnes to 100,000 tonnes of lead.

The lead and zinc minerals are made into a concentrate and shipped by truck from the mine to a port of the Chukchi Sea where they are stored and shipped during the summer open-water season.

For the first 22 years, Red Dog produced from is initial Main Pit. A second, adjacent pit, Aqqaluk, was developed and began producing in 2010. Reserves are sufficient to sustain production until 2030, according to Teck, but there are other nearby deposits of zinc and lead that are known and which can be developed later.

Meanwhile, the mine has become an economic engine for Northwest Alaska. Many of Red Dog’s 500 employees are shareholders of NANA, and other shareholders work for companies, many owned by NANA, which provide support services.

In total, 586 shareholders were employed in jobs connected to the mine in 2013, earning $29.4 million. In total, shareholders comprised 54 percent of the mine-related workforce in 2013.

NANA employs about 1,600 shareholders in all of its companies including the mine and the $29.4 million paid to Red Dog workers represents about half of the corporation’s payroll paid to shareholders.

Over several years the mine has also paid $119 million in Payment-in-Lieu-of-Taxes, a form of negotiated tax, to the Northwest Arctic Borough since the borough was formed in 1987 until this year, mainly for support of schools, and has injected $1.5 billion into the state’s economy through payroll, purchases and tax payments to the state and local borough through 2010, according to a state-sponsored economic study.